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Category: Stock Market and Nike Inc (NKE)
Date: 21 December 2020 Stock Price of Nike (NKE): $137.28 We take a look at the 2nd quarter 2021 earnings report of Nike Inc. one of the worlds largest sporting apparel and accessories groups. For the quarter the group reported revenues of $11.24 billion and net income of $1.25 billion.
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- Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead -John Donahoe, President and Chief Executive Officer "
About Nike Inc.
NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE, Inc. subsidiary brands include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories; and Hurley, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories
Inside a Nike store
Overview of Nike's 2nd quarter 2021 earnings report
Data below refers to the latest quarter unless specified otherwise:
Nike Brand Revenues per product category:
- Revenues $11.24 billion (up 9% from $10.32 billion for the same quarter of the previous year)
- Cost of sales: $6.39 billion (up 11% from $5.78 billion for the same quarter of the previous year)
- Gross profit: $4.84 billion (up 7% from $4.54 billion for the same quarter of the previous year)
- Net earnings: $1.252 billion (down from $1.115 billion for the same quarter of the previous year)
- Diluted earnings per share: $0.78 (up from $ 0.70 for the same quarter of the previous year)
- PE ratio of Nike Inc: 40.2
- Diluted number of shares outstanding: 1.609 billion (up from 1.594 billion for the same quarter of the previous year)
- Dividends declared per common share: $ 0.275 (up 10% from $ 0.20 for the same quarter of the previous year)
- Dividend yield of Nike: 0.81%
- Cash and equivalents: $8.63 billion
- Cash and equivalents per share: $5.36
- Cash and equivalents makes up 3.9% of Nike Inc's market capital
- Cash and equivalents makes up 24.7% of Nike Inc's total assets
- Accounts receivable: $3.71 billion
- Accounts receivable (money owed to the group) makes up 10.7% of Nike Ic's total assets
- Inventories: $6.090 billion
- Inventories makes up 17.5% of Nike Inc's total assets
- Shareholders’ equity in Nike Inc: $10.640billion
- Shareholders equity per share: $6.61
- Nike Inc is trading at 20.8 times its stockholders equity. This is well outside the expected range of between 2 and 5 times what most companies tend to trade at
- The average price to book ratio of firms in the S&P 500 is 3.9
Nike Brand Revenues per product category:
- Footwear $ 6.801 billion (up 10% from the same quarter of previous year)
- Apparel $3.585 billion (up 9% from the same quarter of previous year)
- Equipment: $347 million (up 2% from the same quarter of previous year)
- Total: $10.74 billion (up 9% from the same quarter of previous year)
Nike's management commentary on their 2nd quarter 2021 earnings
BEAVERTON, Ore., Dec. 18, 2020 — NIKE, Inc. (NYSE:NKE) today reported fiscal 2021 financial results for its second quarter ended November 30, 2020.
“NIKE’s strong results during a dynamic environment show the power of staying on the offense,” said John Donahoe, President and CEO, NIKE, Inc. “Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead.”** Our second quarter revenue performance was impacted by strong NIKE Brand digital growth of 84 percent, offset by lower revenue in our wholesale business and NIKE-owned stores.
During the quarter, we experienced temporary door closures in geographies affected by rising COVID-19 cases; however, more than 90% of our owned stores are open today, with some operating on reduced hours. We continue to experience year-over-year declines in physical retail traffic in North America, EMEA and APLA due to COVID-19 impacts and safety-related measures, partially offset by higher conversion rates. “With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “As we look ahead, we are focused on moving even faster against our strategic vision of Consumer Direct Acceleration and fueling sustainable, long-term growth and profitability
“NIKE’s strong results during a dynamic environment show the power of staying on the offense,” said John Donahoe, President and CEO, NIKE, Inc. “Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead.”** Our second quarter revenue performance was impacted by strong NIKE Brand digital growth of 84 percent, offset by lower revenue in our wholesale business and NIKE-owned stores.
During the quarter, we experienced temporary door closures in geographies affected by rising COVID-19 cases; however, more than 90% of our owned stores are open today, with some operating on reduced hours. We continue to experience year-over-year declines in physical retail traffic in North America, EMEA and APLA due to COVID-19 impacts and safety-related measures, partially offset by higher conversion rates. “With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “As we look ahead, we are focused on moving even faster against our strategic vision of Consumer Direct Acceleration and fueling sustainable, long-term growth and profitability
November 30, 2020 Balance Sheet Review
• Inventories for NIKE, Inc. were $6.1 billion, down 2 percent compared to the prior year period, returning to healthy levels globally. • Cash and equivalents and short-term investments were $11.8 billion, $8.3 billion higher than last year primarily due to proceeds from a corporate bond issuance in March and positive free cash flow, partially offset by cash dividends and share repurchases. Total liquidity as of November 30th was $15.8 billion which includes cash and equivalents, short-term investments and committed credit facilities which remain undrawn.
Shareholder Returns
NIKE continues a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. In the second quarter, the Company paid dividends of $385 million to shareholders, up 12 percent from the prior year. During its FY20 fourth quarter, NIKE, Inc. temporarily suspended share repurchase activity in March to maximize liquidity during the COVID-19 pandemic. Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased for approximately $4.0 billion, resulting in approximately $11.0 billion in remaining capacity under the 2018 share repurchase program.
• Inventories for NIKE, Inc. were $6.1 billion, down 2 percent compared to the prior year period, returning to healthy levels globally. • Cash and equivalents and short-term investments were $11.8 billion, $8.3 billion higher than last year primarily due to proceeds from a corporate bond issuance in March and positive free cash flow, partially offset by cash dividends and share repurchases. Total liquidity as of November 30th was $15.8 billion which includes cash and equivalents, short-term investments and committed credit facilities which remain undrawn.
Shareholder Returns
NIKE continues a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. In the second quarter, the Company paid dividends of $385 million to shareholders, up 12 percent from the prior year. During its FY20 fourth quarter, NIKE, Inc. temporarily suspended share repurchase activity in March to maximize liquidity during the COVID-19 pandemic. Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased for approximately $4.0 billion, resulting in approximately $11.0 billion in remaining capacity under the 2018 share repurchase program.
Nike Inc (NKE) stock price history over the last 5 years
The image below, obtained from Google, shows the stock price history of Nike Inc (NYSE: NKE) for the last 5 years. And its been a very good time for Nike Inc stockholders. 5 years ago it was trading at $63 and its currently trading at around $137.28 a stock. That's a strong return of 117.9% over the last 5 years.
The stock of Nike is trading at close to its 52 week high and is far away from its 52 week low, which is a clear an indication that the short term sentiment towards the stock of Nike Inc is very positive at this point in time.
The stock of Nike is trading at close to its 52 week high and is far away from its 52 week low, which is a clear an indication that the short term sentiment towards the stock of Nike Inc is very positive at this point in time.
Nike Inc (NYSE:NKE) stock price history over the last 5 year
Nike (NKE) stock vs Adidas (XTER:ADS) stock over the last 5 years
The image below shows the stock price performance of Nike (NKE) and Adidas (ADS) over the last 5 years. These two firms are two of the biggest sports clothing and accessories makers in the world. The summary below shows the stock price performance of these two firms over the last 5 years. Note they are listed on different exchanges. One is listed in New York the other in Frankfurt
The stock price performance of Adidas has easily outperformed that of Nike over the last 5 years.
- Adidas: 214.6%
- Nike: 117.9%
The stock price performance of Adidas has easily outperformed that of Nike over the last 5 years.
Nike (NKE) stock vs Adidas (XTER:ADS) stock over the last 5 years
Recent coverage of Nike Inc
The extract below covers the latest earnings report from Nike as obtained from CNBC.com
Nike shares hit a record high Friday before reversing lower. The stock was on watch ahead of Nike’s earnings report after the bell Friday, unusual timing for the company. Whether the company beats or misses expectations, Piper Sandler chief market technician Craig Johnson says, any weakness presents a buying opportunity for investors.
“We continue to think that this is a stock that’s got more room to run. And as you look at the chart, you’re still making a nice series of higher highs, higher lows. The recent price action has pulled back, retested the uptrend support line and also the 50-day moving average as it continues to push ahead and make new highs,” Johnson told CNBC’s “Trading Nation” on Friday.
Read the full article here
Nike shares hit a record high Friday before reversing lower. The stock was on watch ahead of Nike’s earnings report after the bell Friday, unusual timing for the company. Whether the company beats or misses expectations, Piper Sandler chief market technician Craig Johnson says, any weakness presents a buying opportunity for investors.
“We continue to think that this is a stock that’s got more room to run. And as you look at the chart, you’re still making a nice series of higher highs, higher lows. The recent price action has pulled back, retested the uptrend support line and also the 50-day moving average as it continues to push ahead and make new highs,” Johnson told CNBC’s “Trading Nation” on Friday.
Read the full article here
Nike Store entrance at night
Nike Inc's (NYSE: NKE) stock valuation
So what do we value one of the worlds biggest clothing and apparel brands stock at following their 2nd quarter 2021 earnings report?
Based on Nike (NKE) latest earnings report our valuation models provides a target price (full value price) for Nike Inc at $62.40 a stock. We therefore believe Nike Inc stock is currently overvalued and we would not recommend long term fundamental and value investors buy into the stock at its current price. We usually suggest looking to buy at least 10% below our target price which in this case is $62.40. We therefore believe a good entry point into the stock of Nike Inc stock is at $56.20 or below.
We expect the stock of Nike to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months. Since the stock of Nike (NKE) is trading at well above our target price we rate the stock of Nike (NKE) as a sell.
Based on Nike (NKE) latest earnings report our valuation models provides a target price (full value price) for Nike Inc at $62.40 a stock. We therefore believe Nike Inc stock is currently overvalued and we would not recommend long term fundamental and value investors buy into the stock at its current price. We usually suggest looking to buy at least 10% below our target price which in this case is $62.40. We therefore believe a good entry point into the stock of Nike Inc stock is at $56.20 or below.
We expect the stock of Nike to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months. Since the stock of Nike (NKE) is trading at well above our target price we rate the stock of Nike (NKE) as a sell.
Next earnings release of Nike Inc (NKE)
It is expected that Nike Inc will release their 1st quarter 2021 earnings report in middle of September 2020